The global logistics started 2019 with significantly integrated development, yet the booming of e-commerce platform results in the growth trends diverged. The most critical factor is adjusting pricing plans as the polycentrism to satisfy the local market and even the offshore markets. Meanwhile, shippers will be assigned to build flexibility into the global operational efficiency to avoid the trade crisis, inflation, and labor crisis, infrastructure worries, and so on. What is more, shippers ought to qualify the ultimate end of the robust business cycle. There are various concerns, so it’s time to wake up and catch up with the new trend and reorganize the core of the logistics.
Nowadays, the economy of only the U.S remains “above trend” due to the fiscal stimulus, according to Nariman Behravesh, the chief economist at IHS Markit, while the other economies of Euro area, Japan or even the emerging market such as China endure the deceleration. He states that the global economy may fall from 3.2% in 2018 to about 3.0% in 2019, and it will continue over the next coming years.
During the recovery period of most Western Europe economies, North Africa, the Middle East, Latin America, and the Commonwealth of Independent States seem not to be as sustainable as before. Even some emerging markets such as China, India appear to slow down.
What lead to economic fall is the sharp drop-off in global trade growth, which dropped from the rate of above 5% at the start of 2018 to almost zero recently.
Meanwhile, the sell-off in stock markets, the central banks start to remove their accommodation which means the worldwide financial states are stretching. Pricing is always considerable pressure. Consumers persist in price sensitivity, and local competition is significantly ferocious.
From 2019, we can predict the tendency of raising worldwide interest rates, the growth of inflationary issue in developed countries and foreign exchange volatility. Ryan Connelly, FSG’s senior analyst of global economics, has concluded in some markets, each region can differentiate their competitive advantages by offering advanced logistical support.
Competitive Advantages by Offering Advanced Logistics Support
1. Inflation Issue
There is an interesting fact that many logistics managers usually care about global consumer inflation. In the near future, trade experts assume that global inflation might continue, especially in developed economies, it sustains approximately 2% to 3%. Several economies namely India, Russia, Brazil slightly increased in 2018.
Nevertheless, in countries that are currently having financial stress lead to recessions or near-recession. Emerging market has topped out and developed further. Even in 2017, they reached a peak since 2013, at 4.9%, this market slow down to 4.8% during 2018, and it keeps edging down over 2019.
2. Pricing Pressure
As the growth of logistics and supply chain, managers start to consider shipping and sourcing alternatives. Therefore, the rise of inflation may cause adverse effects on many countries, notably low wage nations. High inflation may generally trigger to slow down the economy. In order to reduce poverty and disparity, they need to know the importance of stable inflation.
To do that, we need to consider to mitigate the influence of global food price shocks on poverty by using efficient trade policies to shield domestic markets from food price shocks. Also, by applying the right operational policy in supply chains, the owner can save huge money in the cost of goods sold.
3. Fueling Concern
Regarding the pressure put on logistics manager in logistics management, energy markets especially fuel is a critical factor in driving price. Usually, energy markets have never been stable, which cause volatility. They commonly face differences case in crucial unknown. Producers alone cannot 100% guarantee the quality and quantity of supply when rising global demand keeps continuing in short timing.
In conclusion, we can easily observe that it is hard to operate a supply chain nowadays. There are still having latent issue that we have to resolve if we would like to develop business. In the 4.0 industry period, many tasks can be handled well by programming and software. Of course, you and me, maybe, we are not expert in IT, or technology, yet we can seek for someone carrying for us. Hence, outsourcing company has developed for this reason. It is time to wake up to find the right partnership, which can help us to determine your current dilemma.